Liability insurance policies protect the insured and his company against the financial consequences of a damage compensation claim directed against him.
Depending on the insurance scope chosen, liability insurance policies offer protection against the statutory obligation to damage compensation for risks stemming from the operations that are insured. Such business liability insurance is, for instance, supplemented by environmental liability, environmental damage or even extended product liability insurance. Every liability insurance examination first checks the issue of liability, wards off unjustified claims and holds the insured party harmless against justified third-party claims.
The most important types of liability insurance
- Business liability insurance (BLI)
- Extended product liability insurance
- Recall cost insurance
- Environmental liability insurance (ELI)
- Environmental damage insurance (EDI)
- Financial damages and professional liability insurance
BUSINESS LIABILITY INSURANCE (BLI)
Business liability insurance offers protection against third-party claims for personal injury, property damages and co-insured financial claims in connection with business operations.
Risks typically protected by BLI are:
- The main business risks correspond to the individual operational descriptions (e.g., production, marketing, retail, services, direct and indirect construction risks, research and development)
- The typical indirect business risks are, for instance, rental, leasing, risks in the capacity of a construction contractor, owner and tenant of built-up and undeveloped real estate property, carrying out business events, etc.
- Internet liability risks
- Commercial supply of temporary workers
- Participation in work and supply consortia
- Possession and operation of unregistered vehicles
- Damages for discrimination, in particular under the General Equal Treatment Act
- Key loss damages
- Damages to rented movable and immovable items of property
- Damages when shunting someone else’s motor vehicles
- Loading and unloading damages
What do typical examples of damage claims in business liability insurance look like?
BLI covers the essential risks from business operations. A classic example is liability for personal injuries due to a failure to clear snow from the company grounds in winter. Depending on the business operations in question, the focus is on different risks.
For a producing company the insurance protection for damage compensation claims asserted after the products have been delivered or the operations are competed is elementary. This can refer to installation and extension work costs, auditing and sorting costs, recall costs and, of course, personal injuries due to safety related malfunctions.
For removal firm owners professional hedging of liability such as for damages occurring on the stairs of the removal party must be taken into account. Contract logistic companies are more and more frequently a part of the value chain of producing companies. Here the contractual liability law agreements must be studied precisely in order to carefully adapt the extent of coverage to the risk, such as in connection with extended product liability.
Frequently observed are recourse actions of property insurers. For example, after a fire claim they may try to regress against the tenant or neighbour causing the damage to recover their expenses. Besides the quality of the insurance terms, a focus here should be on a coverage amount that is adequate.
Extended Product liability insurance
Extended product liability insurance supplements insurance protection for manufacturers, importers and retailers by co-insuring so-called financial product damages.
What do typical claims in extended product liability insurance look like?
Example 1: Pollution caused during manufacturing entailed with the user in further processing that defective products were produced which could no longer be sold.
Example 2: Defective parts insourced lead despite final checking to consequential damages to the manufactured products with the end user. In addition: the end-user incurs considerable costs to remove the defective insourced parts from other still undamaged products in order to install non-defective parts.
ENVIRONMENTAL LIABILITY INSURANCE (ELI)
ELI protects a company against liability claims for damages due to environmental impacts. Insured are personal injury, property and financial damages caused by any environmental impact transmitted by air, water or the soil. However, environmental damages within the meaning of the Environmental Liability Act are only limited to so-called third-party damages. The Act does not provide for any liability for environmental damages.
The fact that the Environmental Protection Act, that was ultimately responsible for the introduction of ELI, in general contains no-fault liability for business operators and strict liability for particularly environmentally hazardous plants deserves particular attention.
What does a typical example of an environmental liability claim look like?
A crane operated on factory grounds falls over and damages an above-ground oil tank on a neighbouring property. The hazardous materials spill out a leak into the groundwater.
On the business grounds of a warehouse a fire occurs. Due to flying sparks the neighbouring building is set on fire, surrounding residential houses are heavily soiled by gases from the smoke.
Pollution of an above-ground body of water so that a power plant has to cease taking cooling water from the ground.
environmental damage insurance (EDI)
Under the Environmental Protection Act that took effect in 2007, a business operator is liable to the public for damages to biodiversity. The party causing damages to flora, fauna, soil and bodies of water is under an obligation to restore the original environmental status.
Environmental damage insurance supplements customary business and environmental liability insurance and comprises basic coverage for damages to soils, bodies of water and protected animals and plant species as well as their habitats outside of its own company grounds and which are due to plants or operations emanating from the business property. Also insured are operations on other properties as well as damages caused by production defects of products. By means of extension modules damages on one’s own property and to the groundwater can also be insured.
What does typical examples of claims in environmental insurance look like?
Due to an accident on the company grounds a cleaning and disinfecting fluid gets into a brook through the property drainage system. Due to the pollution, the death of fish and pollution of the brook bed results. The bed of the brook must be cleaned by professionals at considerable cost. Shortly thereafter, the authorities called in discover that the course of the brook belongs to a nature reserve harbouring protected species like the river mussel and the crayfish. In order to preserve the species a costly and complicated resettlement is necessary.
What solutions does the SCHUNCK GROUP offer?
The SCHUNCK GROUP reviews existing insurance agreements and generates on the basis of an individual risk analysis an insurance solution especially adapted to the needs of your company.
- Your own marketing wording – especially tailored to the company’s individual risk situation
- Constant adaptation of the insurance strategy to the changing framework conditions, such as through legislative changes
- Assistance from international insurance programmes in your location
- Worldwide cover
- Active risk management for damage prevention and containment
financial damages and professional liability insurance
Financial damage insurance offers protection for „genuine“ financial damages, which means for such damages which are neither personal injury nor property damages and which also do not derive from damages of such types.
What do typical examples of claims in extended product liability insurance look like?
- A real estate administrator lets rental claims on a tenant pass the statute of limitations.
- An IT service provider plans the setting up of an IT network for his clients. On the date for commissioning, it turns out that the hardware is not suitable for this type of use and is in addition much too large.
- An attorney misses an appeal deadline for his client.
- An accountant fails to observe guidelines of the revenue authorities which would favour his client.